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It has been about a month since the las t earnings report for MoneyGram (MGI). Shares have lost about 32.6% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is MoneyGram due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recen t earnings report in order to get a better handle on the important drivers.

MoneyGram (MGI) Misses Q1 Earnings and Revenue Estimates

MoneyGram International posted first-quarter loss of 6 cents per share, missing the Zacks Consensus Estimate by 175%. In the year-ago quarter, the company reported earnings of 15 cents per share.

MoneyGram's total revenue for the reported quarter was $315 million, declined 17% year over year (or 15% on constant currency) and missed the Zacks Consensus estimate by 4%.

Among the components of revenues, fees and other revenues decreased 69% to $301 million, while investment revenues increased 4.5% to $14.4 million.
Adjusted EBITDA of $50.1 million declined 25% year over year.

Adjusted EBITDA margin of 15.9% declined 160 basis points year over year.
Total operating expenses declined by 18% year over year to $306.8 million.

Segment Details

In the Global Funds Transfer segment, money transfer revenues decreased 19% year over year to $273.3 million. Bill payment revenues were also down by 24% year over year to $15.9 million.

Total digital solutions, which include MoneyGram.com, represented 16% of total money transfer revenue.

The Financial Paper Products segmen t report ed total revenue of $26.2 million, grew 16% year over year due to a 3.7% uptick in money order revenues and 34% increase in official check revenues. Adjusted operating margin improved 650 basis points from the year-ago quarter to 31.3%.

Liquidity

As of Mar 31, 2019, MoneyGram had cash and cash equivalents of $129.9 million, down 10.7% from year end 2018 levels. The company's total assets were $4.4 billion, up 1.6% from year end 2018 levels. The company exited the first quarter with $899 million of outstanding debt, almost unchanged from year end 2018 levels.

Adjusted Free Cash Flow for the quarter was $13.3 million, down 55% year over year.

Guidance Affirmed    

The company reiterated its earlier issued guidance which calls for revenue to decline 2% to 4% on a constant-currency basis. Adjusted EBITDA is expected to decline approximately 8% to 12% on a constant-currency basis.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -42.86% due to these changes.

VGM Scores

At this time, MoneyGram has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise MoneyGram has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of NASDAQ, Inc.

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